Thy Neighbor's Portfolio: Word‐of‐Mouth Effects in the Holdings and Trades of Money Managers

ABSTRACT

A mutual fund manager is more likely to buy (or sell) a particular stock in any quarter if other managers in the same city
are buying (or selling) that same stock. This pattern shows up even when the fund manager and the stock in question are located
far apart, so it is distinct from anything having to do with local preference. The evidence can be interpreted in terms of
an epidemic model in which investors spread information about stocks to one another by word of mouth.